PPC/SEM Got Harder and That’s Good For Business Owners

You probably think you’re an above average driver, right? I do and it turns out, most people do as well.

This superiority bias presents itself in many different situations and is moderated by how ambiguous the definition of being “good” is in the given situation. In other words – the more subjective an ability / characteristic is, the more likely we are to feel we are better than average at it.

What does this have to do with PPC advertising? Everything! Since there are so many metrics one can look at that would constitute success in the PPC world, just about every PPC expert can produce results that point to him having done a good job.

However, most of us also think that this profession is full of hacks that don’t know what they’re doing and we often wish the entry barrier to our profession would be higher, or at least – there would be an easy way to differentiate the good from the bad.

Well, our wish is coming true! Last week’s changes to Google’s search layout just made it a lot harder to succeed in PPC advertising without actually, objectively, being good at it. Here’s why:

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Why do bad PPC professionals thrive?

There’s one reason for why you can thrive (get tons of clients and make plenty of money doing paid advertising) without being good at it – most customers can’t tell the difference.

The large majority of bussineses need PPC experts because they don’t know the first thing about Paid advertising so if you show pretty graphs and data-rich tables to a prospective customer and use “cool” PPC terminology like CPA, CRO, funnels, quality score, bidding strategy, pixels, analytics, optimization and more, you’d probably be able to land most clients.

And it’s not only easy to get the clients, if you’re creative enough with the results you report to your customers after you land the account, you can easily make them think you’re doing a great job.

*Side note: How I ran a “successful” Adwords campaign for myself without knowing what I was doing:

Quite a few years ago I decided to open my first small business, offering content-writing services to companies that want to increase their web presence and get more customers online.

At the time, small and large businesses alike were coming to realize how important their website could be to reach new customers and grow their business.

Since content has always been central to ranking higher on Google search, there was plenty of demand for this type of service.

Competition for supplying it was also high, with many freelancers and copywriting companies looking to rank higher for the same keywords I was. This made it harder for a new site such as mine to reach the first search results page. And if you’re not on the first page, you essentially don’t exist.

I put a lot of efforts into SEO but I knew that until it produces significant results (steady stream of new clients), I had to find another way of reaching my target audience.

That’s when Google sent me a $200 promotion to advertise on Adwords.

I jumped on it. I said to myself – I don’t really know what I’m doing (PPC was a foreign language to me at the time), but it’s free so I’ll advertise and see what happens.

I opened one campaign targeting a handful of keywords with only one ad variation leading prospects straight to my homepage. I wrote the price I wanted to charge per article, which was $10, in the first line on the ad. Used the second two lines to pitch myself and let it ride.

You know what happened?

I immediately started getting phone calls and email inquiries from people interested in my services and managed to close ALL of those deals!

I was feeling pretty good about myself. It was my first attemp at doing PPC / SEM and I was clearly doing it right – I got customers, didn’t I?

Not so fast..

After the $200 in free Adwords advertising had run out I had to start paying for ads out of pocket. But before I invest in this, I decided to actually, finally, look at the numbers and really analyzing what they meant for my business.

I spend $200 and got 10 new customers. That’s a cost per customer of $20. Each customer paid me $10 per article and purchased an average of 8 article, that’s a revenue per customer of $80.

If that had been my $200 and not a gift from Google, I would have gotten an average profit per customer of $60.

I then understood that for every customer that purchases less than 2 articles I will lose money (because a customers “costs” $20 to acquire but pays less than $20 for the service).

I also realized that the reason I was able to close all the clients was probably because my prices were super-low.

So I had 2 choices, either increase prices or create content packages so people buy in bulk. I decided to do both.

My conversion rate from Adwords went down but my profit margins went up. I started getting tons of customer referrals, added a number of freelancers to write for me and the business grew [until I got a lucrative job offer and decided to close down shop for good].

I brought this story up because it highlights a problem many small business owners have – when you see more customers coming in to your business you immediately think that the PPC advertising was successful.

But what if it’s not the right kind of customers? Maybe a different audience would be more profitable in the long run.

When you really dig in to the numbers you might find that you’re actually losing money on them and you might need to either modify your business model or change the targeting and messaging.

By looking at an Adwords campaign results you wouldn’t find answers to these questions and others, these are insights that the PPC expert or SEM analyst should give you after analyzing results and they require extensive testing in order to prove.

But not all paid advertisers will give you the full picture.

Some won’t because their PPC skills are so basic they just wouldn’t know to do so, and some won’t because they’re lazy – by giving you insight like that, you might ask them to do some work and change the PPC campaigns they’re running.

It’s easy to identify the lazy ones – just ask them to show you what they’ve changed in the campaigns in the passing month.

It probably won’t amount to much.

If it doesn’t, give them a chance – tell them you expect them to always perform tests – either test new keywords, landing pages or ad copy. Never let the Adwords account stagnate. If they still don’t do anything, fire them.

The not-so-skilled PPC “specialists” are harder to pin-down. They might perform a bunch of tests and always seem to be working hard but they won’t do a good job producing results and even worse – they might not fully understand what their results mean in order to make improvements in the future.

How are you supposed to know if a PPC specialist is skilled or not?

Luckily, last week’s changes will likely make it harder for those still playing checkers on the PPC chess board to succeed.

Google’s change to search layout will make it especially easier for small business owners and high-level management to spot the weaker PPC, those who don’t have a strong grasp of strategy, tactics and optimization.

What’s changed for Google Search Advertising?

As you might have heard, Google has pushed a massive change to search results pages layout.

Up until now most search results included up to 2 PPC ads on top, followed by organic search results and a number of PPC ads on the right hand side.

The major change we’re experiencing now is that:

All right hand side PPC ads are going away

Instead of 2, you might see up to 4 PPC ads before the organic search results

(There are additional changes that I won’t get in to, read more about them here.)

How to succeed in the new PPC/SEM landscape

Fact: there are now less slots available for PPC advertising.

The way Google chooses which ads to show hasn’t changed though – if you have a higher quality score and/or bid than competitors for a specific search term, you’ll win a slot.

The cost per click is probably going to increase because:

There is less supply of advertising placements in the search results now. The imbalance between supply and demand will increase cost per click because companies will now have to increase their bids in hopes of showing up in search results.

The placement above organic search results usually gets clicked on quite a lot (much more than right hand side ads did) and so by showing your ads there you’ll get more clicks thus – pay more money to Google.

While that sounds like a bad thing, it isn’t necessarily – yes, the cost per click (CPC or PPC) is going to be higher, but who cares about clicks anyway?!

Those who do paid advertising are usually referred to as Pay-per-click professionals but in reality, the click it self is meaningless – the end goal is what’s important and the end goal is never a click, it’s a customer.

And the cost per customer could very well be lower:

We know you’ll get more clicks on ads, now that they’re on top of search results (this is true even if you’re an unskilled PPC that simply bids higher than the competition).

If you’re good at your PPC job you’ll be able to increase the conversion rate from click to sign up / purchase. How? You tailor the ads and optimize the funnel to make sure your ad is seen and clicked on buy the most relevant audiences.

In other words – the cost per click might be higher, but if you know what you’re doing, you’ll be able to mediate that cost by optimizing the user acquisition funnel and increasing the percentage of people who click and then register.

If you don’t know what you’re doing, you’ll get more clicks, they won’t convert, the business will receive less new customers at a higher cost and you’ll get fired.

=>Finally, you’ll actually have to understand all the aspects of paid advertising in order to do a good job and achieve success!

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